This Philadelphia entrepreneur is helping fix a broken food system

Colleen DeBaise, The Story Exchange

8:00 AM ET Thu, 15 June 2017

CNBC.com

Jeremy Woodhouse | Getty Images

When Tatiana Garcia-Granados bought a fixer-upper in Philadelphia's Strawberry Mansion neighborhood in 2002, she fell in love with the area's historic homes, colorful murals and tight-knit family feel.

Less appealing was the state of decay that the neighborhood — once home to jazz musician John Coltrane — had fallen into. Not only was there crime and a lack of decent housing, but Strawberry Mansion had become unhealthy: Its residents, many of whom are working-class African-Americans and Latinos, suffered from diet-related diseases. The culprit? Lack of access to healthful food. The corner shops were more likely stocked with processed packaged food than fresh fruits and vegetables.

Garcia-Granados, who was just finishing up her MBA at University of Pennsylvania's elite Wharton School, decided to investigate the problem. "We're relying so much on markets," she says. "But when you have pockets of either low density or high poverty, there's no incentive for people to create supermarkets" — think Whole Foods or Trader Joe's — "or other interventions that would get healthy food into the communities."

What frustrated her was the knowledge that just outside Philly, in Pennsylvania's rolling countryside, family farms were producing beautiful, nutritious, organic produce. Yet those farmers were struggling and on the brink of disappearance themselves. "Our agricultural system has just become bigger and bigger," she says. "It's cheaper to get a truckload of food from California than it is to get a pallet from Upstate New York to New York City. It doesn't make any sense."

Her ambitious solution: rebuild the regional food infrastructure. In 2008, she and husband Haile Johnston partnered with Bob Pierson, a longtime advocate of farmers markets in Philadelphia, to launch The Common Market. As a wholesaler, the nonprofit connects about 80 local farms to public schools, hospitals and workplaces — essentially, supplying fresh produce, meat and dairy to "communities that need the food the most," she says.

Building for scale

A key to solving the distribution problem is scale. While Garcia-Granados would still like to see Strawberry Mansion's corner shops filled with fresh food, it's simply not cost-effective for local farmers to supply mini markets with small batches of produce. Instead, The Common Market strikes vendor deals with big food-service companies like Sodexo, Aramark and Compass Group, which supply the city's institutional buyers. As a result, The Common Market now delivers fresh farm food to 26 charter schools, reaching 14,000 kids.

"The reason we work with the institutions is that they have the volume that makes sense for the farmers," Garcia-Granados says. "The food is ultimately going to the kids."

Starting such a capital-intensive business isn't easy. A food distribution network requires refrigerated storage and a fleet of trucks — and profit margins are low. For that reason, the co-founders decided to structure The Common Market as a 501(c)(3) nonprofit. "We're able to get grants for capital, and then we're also able to tap into low-interest or 'friendly' loans," Garcia-Granados says.

The business has received upwards of $1 million in grants from the W.K. Kellogg and Kresge foundations, and has worked with RSF Social Finance to fund the $1.2 million acquisition of a 50,000-square foot warehouse in North Philadelphia.

Growing for impact

The Common Market also has earned revenue — certainly enough to prove its concept. The nonprofit buys food from farmers, then marks it up and sells it wholesale to buyers. In its first year, The Common Market made $100,000; after 5 years, it reached its break even point of $1.7 million. This year, the 35-employee business anticipates $4.5 million from its Philadelphia operations.

Based on this success, the co-founders have decided to expand. "We're replicating our model to different regions in the country," Garcia-Granados says. Last year, The Common Market opened in Atlanta, making $250,000 in revenue in just 9 months of 2016. The business expects $750,000 for 2017, and counts Emory and Georgia Tech universities and 12 hospitals as buyers. Meanwhile, Garcia-Granados currently is doing her due diligence, looking to expand to New York, Chicago and the Central Texas area.

The growth still surprises Garcia-Granados, who was merely thinking about bringing fresh food into Strawberry Mansion when she started. "When we went into it, we weren't thinking of solving a national problem," she says. Now, it's The Common Market's mission to bring together two marginalized groups: lower-income minority communities and small farmers. And in that sense, change can't come fast enough, she says.